Changing Bitcoin’s spots

A consortium of companies are trying to turn Bitcoin into a token.

The phrase “a leopard never changes its spots” means it’s impossible for one to change their character. In the crypto world, Bitcoin has thus far, resisted any attempts to make it more amenable. But a group of companies thinks they’ve come up with a way of getting this particular leopard to have a change of heart. 

Kyber.Network, BitGo, and Republic Protocol are creating a version of Bitcoin on the Ethereum network called WBTC, or Wrapped Bitcoin Tokens. Why on earth would you want to do that? Some blockchains are popular and have a lot of trade volume while others have more functionality, but the two rarely meet. So, BitGo and co are stitching them together and calling it WBTC.

“Bitcoin is the most popular cryptocurrency out there and it has the most liquidity. You want to take advantage of that. One use case is as a store of value. How about extending it for use in smart contracts?” says Desmond Ho, a software developer at Kyber.Network. 

By “wrapping” a portion of Bitcoin, the WBTC token would enable the liquidity of Bitcoin to be used in a more flexible manner on the Ethereum network by smart contracts. This would enable faster Bitcoin payments and could be used for a variety of decentralized applications (Dapps). While there are other solutions to Bitcoin’s limitations, such as the Lightning Network, this solution changes the coin’s usage entirely. 

Now, wrapped tokens have been criticized in the past for not being easy to use, but BitGo–which Goldman Sachs recently invested in–will do all the hard work and wrap Bitcoin and release it to Kyber and Republic Protocol who will be the first merchants. A Decentralized Autonomous Organization (DAO) made up of other projects in the ecosystem will publicly audit the books and also handle the appointment of any other custodians, merchants, DAO members and improvement proposals, according to Taiyan Zhang, Republic Protocol’s CEO. 

“Wrapped Bitcoin is the tokenized version of Bitcoin. It’s a one to one backed ratio. It’s like how stablecoins are backed by USD or gold.”

Desmond Ho, software developer at Kyber.Network. 

Currently, the smart contracts are in the audit stage and the specifications of the projects will be up on Github by next week. All being well, WBTC will launch on Ethereum in January 2019. Ho says the designing and scoping of the project was the most difficult step because there were so many parties involved but now that they are on the same track, hopefully there will be wide adoption of wrapped Bitcoin. Early signs are promising, with MakerDharma, and AirSwap all saying they’ll get involved with the project when it launches next year. 

Until now, Bitcoin has been reluctant to change, but this announcement catapults the coin into some of the most bleeding-edge corners of crypto. The leopard isn’t just changing its spots, it’s gone and bought itself a whole new wardrobe.

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